A caller to the Dave Ramsey Show recently sparked a pointed conversation about cars, wealth-building, and what it truly means to earn a solid income. The caller was a 24-year-old named Micah. He earns $80,000 per year, maxes out both his 401(k) and IRA, and carries zero debt. His question was direct: he has $30,000 in cash he wants to put toward a 2019 Nissan 370Z as a weekend car, but he is unsure whether investing the money would serve him better.
Ramsey’s response was blunt. He offered one guiding principle for anyone who wants to build real wealth rather than just look the part.
What Ramsey Says Will Stop You From Building Wealth
Ramsey told Micah flat out that buying the sports car was a poor choice for anyone serious about getting rich. He acknowledged his own love of cars, mentioning he had driven to the studio in his Raptor that morning, before landing on his core point: “If you’re going to build wealth, you have to keep as small an amount as possible going into things that go down in value.” In Ramsey’s framework, cars are the textbook example of a wealth-eroding purchase, and his own research backs that view. A Ramsey Solutions study of more than 10,000 millionaires found that 84% credited ditching car payments as a key factor in building their wealth.
The depreciation math reinforces the point. According to Kelley Blue Book, most vehicles lose roughly 20% of their value in the first year alone, and close to 60% within five years. Applied to a $30,000 purchase, that math leaves the car worth roughly $12,000 half a decade later. Ramsey also applies a practical rule of thumb: the combined value of every vehicle you own should not exceed half your annual take-home pay. For someone earning $80,000, that ceiling sits at $40,000 total, which includes any car Micah already drives.
Ongoing ownership costs pile on further. AAA’s 2025 “Your Driving Costs” study puts the average annual cost of owning and operating a new vehicle at $11,577, covering fuel, maintenance, insurance, depreciation, and financing. That figure fell $719 from 2024 thanks to lower depreciation, reduced finance charges, and falling gas prices, yet it still represents a substantial drag on any household budget. Depreciation alone accounts for an average of $4,334 per year, making it the single largest ownership expense in the study. Financed buyers carry an even heavier burden: the average new-car monthly payment reached $767, according to Experian, while Edmunds tracked it at $754 in Q3 2025, with roughly 19% of new-car buyers committing to payments of $1,000 or more per month. For context, Americans collectively owed approximately $1.69 trillion in auto loan debt in early 2026, according to the Federal Reserve Bank of New York. For anyone trying to build long-term wealth, attaching a large monthly payment to a depreciating asset is one of the fastest ways to undercut that goal.
Ramsey’s standing advice is to avoid car loans entirely and to buy reliable used vehicles with cash whenever possible. His logic is straightforward: paying interest on something that loses value every month is a double loss, and the longer the loan term, the deeper that hole becomes.
Is It Ever OK to Splurge?
Ramsey’s core argument about cars eroding wealth is well-founded. A sports car is an expense, not an asset, and any financial plan that treats it otherwise is built on shaky ground. Micah’s specific situation, though, deserves a closer look on its own terms, because the details here matter quite a bit.
Micah is already doing things that most people in their twenties are not. He maxes out his retirement accounts, carries no debt, and has saved $30,000 in cash to cover the purchase outright, with no plan to finance anything. That profile looks nothing like the average American financing a car at a $767 monthly payment on a loan stretching past five years.
On a pure numbers basis, investing that $30,000 for compound growth or applying it toward a home down payment would likely produce more wealth over time. Even so, there is a meaningful difference between advising someone piling up debt on a car they cannot afford and counseling someone who has already built a disciplined financial foundation. The real question for Micah is whether he can sustain all his good habits after the purchase.
If he can keep funding his retirement accounts, stay out of debt, and comfortably cover insurance and maintenance on a sports car, buying it in cash is a defensible call. Wealth-building is a long game, and treating every spending decision as a moral failure is a reliable path to burnout. The approach that actually keeps people on track is simpler: save first, invest consistently, and pay cash for the things you enjoy without breaking the plan that got you there.
Editor’s note: This article was updated to reflect current Kelley Blue Book depreciation data showing vehicles lose close to 60% of their value within five years, revised Edmunds monthly payment figures to $754 (Q3 2025), and the Federal Reserve Bank of New York’s figure of approximately $1.69 trillion in total U.S. auto loan debt as of early 2026. A statistic from Ramsey Solutions research on 10,000 millionaires was also added.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks